Saturday, December 18

Russia Turns from Freedom to Fascism

From IHT:
Practically overnight, Russia and its president, Vladimir Putin, would create an energy company that not only controls about 20 percent of the nation's oil exports but also has some of the world's largest energy reserves.

A Kremlin campaign that unfolded over the past year will have succeeded in dismembering the country's foremost private oil company, and it will send a signal to Russia's business elite that the state is back in business, literally.
This isn't good for Russia, and it isn't good for the rest of us either. Putin is essentially creating a fascist state. He exposes fierce nationalism, expansionism, domination of Russia's neighbors, and socialism. The West must do everything it can to stop Putin before this gets out of hand because we know were National Socialism leads.

A U.S. Bankruptcy Court judge in Houston on Thursday ordered a 10-day delay in the sale, but officials in Moscow organizing the sale rejected the ruling.
Putin has put too much effort into destroying this company to stop for some US Federal Court judge.

The U.S. judge, Letitia Clark, issued a temporary restraining order intended to block the participation of lenders and Gazprom. The banks, analysts said, have extensive operations in the United States, and violating the ruling could put them in contempt. Clark's ruling did not apply to the government of Russia.
Unfortunately that isn't going to stop it either. Putin would rather not make it blatant that he is trying to nationalize Yukos, but he will if he has to. Remember, he controls the media in Russia. He can spin this as he wishes at home.

Although two other largely unknown companies have submitted bids for Yukos, their presence was seen as purely an effort to make the auction seem valid. Foreign suitors, including companies from China, India and other energy investors, have been discouraged from participating in the bidding process.
This is just a façade. I do, however, wonder what Putin has on some of these companies that he's able to "discourage" them from participating.

If the auction is completed on Sunday, Yukos will essentially die that day - a casualty of efforts by Russian prosecutors that came with the tacit blessing of Putin. The founder of Yukos is now jailed and on trial on tax and fraud charges, the company's American executives are in self-imposed exile, and its shareholders are out billions of dollars. Russia's actions have set foreign and domestic investors on edge, prompted a capital flight and raised questions about the rule of law and how businesses will fare.
This is a very clear message to investors and business that operate in Russia. "Agree with Putin, or the state will take everything you have." This is, of course, a very bad message to be sending because investors because they have many choices. So why would they let themselves be bullied in Russia?

Lee Raymond, the chief executive at Exxon Mobil, said this month that he was re-evaluating whether it was the right time to invest in Russia.
Hint: If Exxon Mobil is thinking of pulling out and you have some kind of business operation in Russia, you should already be gone. Putin is less likely to pick on a large company like Exxon Mobil then a smaller less noticeable operation.